Morning Dove Company manufactures one model of birdbath, which
is very popular. Morning Dove sells all units it produces each
month. The relevant range is 0–1,500 units, and monthly production
costs for the production of 1,200 units follow. Morning Dove’s
utilities and maintenance costs are mixed with the fixed components
shown in parentheses.   

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Question: Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sell…
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Production Costs Total
Cost
Direct materials $ 1,500
Direct labor 6,500
Utilities ($130 fixed) 600
Supervisor’s salary 3,200
Maintenance ($320 fixed) 460
Depreciation 750

Required:
1. Identify each cost as variable, fixed, or mixed, and
express each cost as a rate per month or per unit (or combination
thereof). (Round your per unit value to 2 decimal
places.)

2. Determine the total fixed cost per month and
the variable cost per unit for Morning Dove. (Round your
variable cost per unit to 2 decimal places.)

3. State Morning Dove’s linear cost equation for a
production level of 0–1,500 units. Enter answer as an equation in
the form of y = a + bx. (Round your variable cost per unit
to 2 decimal places.)

4. Calculate Morning Dove’s expected total cost if
production increased to 1,400 units per month. Enter answer as an
equation in the form of y = a + bx. (Round Variable cost
per unit to 2 decimal places.)

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